New Bill Amends Rules On Elections, Reserves

October 13, 1991|By Mark Pearlstein.

House Bill 1929 was the second major piece of condominium legislation passed during the last session of the Illinois General Assembly.

This bill was signed into law by Gov. Jim Edgar on Sept. 26 as Public Act 87-746 and became effective immediately. The bill amends various sections of the Illinois Condominium Property Act pertaining to reserves, elections and meetings, leasing, the power of condominium directors, association records and collections.

To clarify an issue raised from past reserve legislation, the bill states that an association cannot waive the requirement to maintain reasonable reserves if its condominium declaration requires reserves.

A major focus of the bill covers election and board meetings. The bill provides that if there are multiple owners of a single unit, only one of the owners can serve on the board at one time. This statute would preclude spouses from serving on a condominium board at the same time-and save a few marriages in the process.

The bill also regulates the conduct of elections by permitting boards to distribute biographical information about candidates for election to the board, but prohibits the board from expressing any preference for candidates and requires the directors to give all candidates the opportunity to distribute background information to the unit owners.

The form of the proxy used for a condominium election must give the unit owners the opportunity to designate any person as the proxy holder and to direct the proxy holder to vote for any particular candidate or a write-in candidate.

The bill modifies certain changes made in 1989 concerning leasing. If a unit owner enters into an oral lease for the rental of a condominium, a memorandum of this agreement must be delivered to the board of directors no later than the date that the tenant occupies the unit.

Under this bill, an association can now file a joint action against the tenant and the unit owner to prevent the tenant from occupying a unit where the owner fails to comply with the leasing requirements of an association.

The Condominium Act requires a developer to hold a meeting to elect the board of directors from the unit owners within a certain time period, but developers often have ignored this requirement.

Public Act 87-746 now permits unit owners holding 20 percent of the interest in the association to call this meeting by filing a petition with the developer. After filing a petition, the unit owners may send notice and hold this meeting to turn over control of the association to the unit owners.

The amendments also regulates the actions of the board of directors. Many declarations provide spending limitation clauses that, according to existing law, control the amount which the board can spend for additions and improvements to the condominium property. This bill states that such additions and improvements now include expenses for structural and non-structural modifications.

The new statute also prohibits the board from adopting a regulation that conflicts with the Condominium Act or the condominium instruments. This provision is consistent with case law on the subject of condominium rules.

Demands by unit owners for association records often generate controversy and litigation. The new amendments require the board of directors of a condominium association or a master association to maintain for inspection proxies cast for elections as well as the ballots that an association must maintain under current law.

When a unit owner submits a written request for records of the association, the amendments now require the board to actually provide the records properly requested rather than simply responding to the request.

The new amendments also clarify certain issues relating to condominium litigation. If an association seeks to evict a tenant for failure of the unit owner to provide leasing documentation, the association must first issue a demand for possession that states the nature of the documents which the owner has failed to produce.

When an association seeks to collect unpaid assessments by an eviction proceeding, it must first issue a demand for possession that contains an itemization for assessments, late charges or interest, and any attorneys` fees claimed for any services incurred before the demand. All legal fees claimed by an association in the demand are subject to review by the courts.

However, to prevent a delinquent unit owner from dodging service of this demand notice, the amendments now merely require an association to send the document by certified or registered mail. The association need not prove that the demand was actually delivered in order to proceed with the action to collect delinquent assessments.

In addition to the signing House Bill 1929 into law, Gov. Edgar also signed House Bill 2494 on Sept. 23 as Public Act 87-692. In contrast to the immediate effective date for House Bill 1929, House Bill 2494 will not become effective until Jan. 1, 1992.

As previously noted in this column, House Bill 2494 terminates a condominium lien after a mortgage foreclosure and requires a unit owner to notify the association after the recording of a mortgage on the condominium unit.